Trump’s tariffs may drive Africa closer to China, EU — Citigroup

Citigroup’s Head of Sub-Saharan Africa, Akin Dawodu, has warned that the new U.S. tariff regime targeting African countries could deepen the continent’s economic shift towards alternative global trade partners, particularly China, the European Union, and the Middle East.

In an interview following the rollout of fresh tariffs by former U.S. President Donald Trump on Thursday, Dawodu said the U.S. decision to impose tariffs of up to 30% on imports from South Africa, Algeria, Nigeria, and Ghana may further reduce Africa’s already marginal position in American trade.

“China is already Africa’s largest trading partner, with the EU following closely. These new tariffs will likely accelerate that shift,” Dawodu said.

The former U.S. President’s revised global trade plan also places 15% tariffs on goods from Nigeria and Ghana, signaling a tougher American stance on African trade flows.

The tariff announcement comes at a time when African economic alliances are rapidly evolving.

A report by Afreximbank Research earlier this year highlighted that BRICS nations have stepped up capital investments in Africa and are working to counter the fallout from global trade wars, positioning themselves as credible alternatives to traditional Western partnerships.

Though foreign capital inflows from BRICS countries into Nigeria dropped by 59.84% in Q3 2023, trade between the blocs remains robust. Dawodu said the Middle East is also rising as a critical partner, especially in the area of food security and infrastructure.

According to Dawodu, Africa’s vast natural resources, including 60% of the world’s remaining arable land and a third of its mineral reserves, make the continent indispensable to future industries—especially those powering artificial intelligence and advanced manufacturing.

“There are global markets for Africa’s resources; they don’t have to rely on the U.S.,” Dawodu emphasized.

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Still, the U.S. accounts for less than 2% of Africa’s total trade, a figure that further underscores the continent’s growing detachment from American trade flows.

Despite the external pressures, Dawodu underscored that intra-African trade holds the key to long-term economic resilience.

He urged African governments to tackle non-tariff barriers, including inconsistent legal frameworks, logistical bottlenecks, and labor mobility restrictions—issues that continue to hamper regional integration.

Dawodu highlighted the potential of the African Continental Free Trade Area (AfCFTA) to lift Africa’s global trade standing if effectively implemented.

“AfCFTA could increase Africa’s share of global exports to 4.4% by 2043, up from the current 3.5%,” he projected.

In a separate analysis, the African Export-Import Bank (Afreximbank) stated that while Trump’s tariffs send a strong political message, their direct economic impact on Africa may be limited due to the continent’s deepening trade ties with China.

The bank noted that China has overtaken the U.S. as Africa’s top trading partner, with African exports and imports increasingly routed through Beijing in recent years.

“This growing trade implies that U.S. tariffs may not bite as hard as they would have two decades ago,” the report said.

However, Afreximbank warned of indirect consequences, particularly if U.S.-China trade tensions slow China’s economy.

“That would hurt African commodity exporters significantly. China remains the main buyer of crude oil from Nigeria and Angola, copper from Zambia, and cobalt from the DRC,” the bank added.

Despite the near-term uncertainties, Citigroup maintains a positive long-term outlook for Africa, driven by demographics and rising domestic demand.

“Africa’s growth will be increasingly propelled by its youthful population and rising consumer class. These are fundamentals that can withstand short-term disruptions like tariffs,” Dawodu concluded.